How to Get an Instant Auto Loan
6 MIN READ
Published September 26, 2023 | Updated October 26, 2023
Buying a new car is an exciting but sometimes frustrating process as you navigate through the paperwork, negotiate prices, and wait for days for the lender to approve your car loan. It can be worse when you have bad credit. Instant auto loans can expedite the process of financing your next car so you can get a loan hassle-free. Learn more about how the process works, the benefits and drawbacks of these auto loans, and what options are available if you have bad credit.
What Are Instant Auto Loans?
An instant auto loan or same-day auto loan is a loan that is approved in under an hour. Auto loan companies that offer these loans have their own criteria for approvals and interest rates based on your creditworthiness. They’re offered by traditional banks, online lenders, and credit unions. In most cases, applications can be submitted online, and you’ll receive a decision quickly.
Pros and Cons of Same-Day Auto Loans
Like any other loan, instant auto loans have their own pros and cons. It’s important to weigh them carefully to ensure this type of loan is right for you.
- With approvals available so quickly, you’ll be able to save a lot of time on financing and will get access to your new car faster.
- The online application process is convenient.
- You may have more negotiating power with the dealer when you already have financing in place.
- If you’re already preapproved for the loan, you’ll know exactly how much loan you have access to. This will help you avoid expensive upsells that you can’t afford.
- If you have bad credit, it may be difficult to get an instant auto loan. You may need to provide a larger down payment or additional documents to support your application.
- Not all lenders are reliable. Be wary of scams and verify the company’s information if you feel there are any red flags.
- Interest rates may be higher, especially if you have bad credit.
How To Apply for an Instant Auto Loan
Many lenders offer the option to apply for instant auto loans online. This process makes it easy to get financing for a used or new car, and with instant online approval, the process is much simpler. Here’s how to apply for an auto loan online:
- The first step is to find a reliable lender that meets all your needs and offers you the best deal. Compare the terms offered by different lenders based on your credit score, the term of the loan, and the type of vehicle you are purchasing.
- Once you select a lender, start the online application process. Filling out the application process takes just a few minutes. You’ll also have to upload documents the lender has specified. This will allow the lender to verify your information and process your application quickly.
- Once you receive a loan offer, review the terms carefully and ensure you’re aware of your total loan cost. If you’re satisfied with the terms, sign the acceptance, and the process will be complete.
Teresa Dodson, debt expert and founder of Greenbacks Consulting, encourages consumers to carefully read their contracts before signing anything. “When applying for an auto loan online, make sure you read the fine print. Many of these companies run a credit check with multiple lenders, and this can affect your credit,” Dodson shares.
Requirements for Getting an Instant Auto Loan
When looking for quick financing, it’s important to provide the lender with the right documents and check beforehand if you meet the lender’s eligibility requirements. In most cases, you’ll have to satisfy the following criteria before you can get an approval for an instant auto loan:
- You must be over 18 years of age.
- You must have a reliable and verifiable source of income.
- You must have a valid driver’s license.
- You must have enough down payment.
- You must meet the lender’s minimum credit score requirements.
- You must have proof of identity.
- You must be able to purchase vehicle insurance.
Interest Rates and Terms for Instant Auto Loans
The interest rate you may get on an instant auto loan is based on your credit score. Lenders group borrowers into credit bands based on different credit scoring models like VantageScore and FICO. While there are other factors that may determine interest rates, your credit band is the most influential. The average interest rates for auto loans across all credit scores are 11.17% for used cars and 6.58% for new cars.
Here's a detailed look at the average interest rate for different credit bands for new and used car loans:
- 300-500: 14.08% for new cars and 21.32% for used cars.
- 501-600: 11.53% for new cars and 18.55% for used cars.
- 601-660: 8.86% for new cars and 13.28% for used cars.
- 661-780: 6.40% for new cars, 8.75%for used cars.
- 781-850: 5.18% for new cars and 6.79% for used cars.
Online Calculators for Estimating Monthly Payments
When comparing auto loan interest rates from different lenders, use an online calculator to estimate how much you’ll pay each month. Simply enter the auto loan amount you wish to borrow, the type of vehicle, the interest rate, and the length of the loan. The result will help you determine how much of a car loan you can afford to borrow. You’ll find online auto loan calculators on lenders' websites as well as many financial websites.
Bad Credit? How to Get an Instant Auto Loan Approval
If your credit history is less than perfect, you may still be able to purchase a new or used car through lenders that offer bad credit car loans. Many of these lenders will also offer instant auto loan approvals, but you can expect to pay a higher interest rate depending on your credit profile and the lender.
In most cases, you’ll need to provide additional documents, such as cell phone or utility bills, to show you have a track record of making timely payments. Another option is to offer a larger down payment or purchase a less expensive vehicle to keep your loan cost low.
Private-Party Auto Loan Instant Approval
When you have bad credit, buying a used car directly from the owner can sometimes be a better deal because you may be able to get it at a much lower price. But your financing options can be limited when you’re not buying from a dealer. One option is to get a private-party auto loan. Banks, credit unions, and online lenders offer these loans. You can select a car you want to purchase and then apply for financing. If the lender approves, they’ll usually pay directly to the lienholder or seller. You can then repay the lender over the loan term.
While you can also finance your car through personal loans for bad credit, a private-party auto loan is usually less expensive because the car serves as collateral.
5 Tips To Get an Instant Auto Loan Approval with Bad Credit
Even with bad credit, there are several things you can do to improve your chances of getting an instant auto loan approval. Consider some of the tips listed below:
- Offer additional documents and information that can strengthen your profile. For example, if you have rent receipts, cell phone bills, or utility bills, add them to your application to show that you have a history of making timely payments.
- Improve your credit score before you send a loan application. Keep your debt-to-income ratio low and pay your bills on time to improve your chances of approval.
- Get a co-signer with a good credit score for your auto loan.
- Accepting the first bad credit auto loan that comes your way can be a mistake. Compare multiple offers to find the most competitive terms.
- Negotiate the car prices. This is necessary to get the best possible deal on the car. The lower the amount you need to borrow, the better your chances of approval for car financing.
Find an Instant Auto Loan Near You
If you want to find auto lenders offering instant car loans near you, your best bet is to use the internet to search for different loan providers in your area. Start by getting a free copy of your credit report to check your credit score. Based on your credit score, look for lenders offering auto loans to borrowers with similar credit profiles. Other than online lenders, look for auto loan options from traditional banks and credit unions. Check the lender’s customer reviews thoroughly and, if possible, prequalify with at least three lenders to find the best possible deal.
The Bottom Line on Instant Auto Loans
With easy and convenient online applications, it’s possible to get approval for your auto loan instantly so you can be on your way to the car dealership to bring your new car home. While the ease and convenience make this an attractive option, don’t forget to do your research and compare offers from multiple lenders to find one that best fits your needs in terms of the annual percentage rate and loan term.